>What do you consider "monopoly profits?" As of the 2013 leak, Uber was grossing $1bn in revenue [1]. Uber takes a 20% cut from each transaction, and has an extremely lean cost structure - drivers pay for gas, insurance, amortize vehicles, don't get any benefits, etc. Even if we assume costs to be 10% of revenue (which they aren't), Uber still would have earned a gross profit of $100m in 2013. Judging by Uber's current $50bn valuation, their revenues have grown anywhere from 3x-5x over the past 2 years
Assuming all this is correct (leaks sometimes are not) this does not solve the competition problem. The more money they make in a market the more attractive it comes for someone else to enter that market.
>You are right that there are low barriers to entry in this market - it's why most drivers do both Uber and Lyft. The underlying technology is the same, and the capital (drivers) is not proprietary and can be shared between different companies. However, if Uber were to stipulate that drivers sign an employment contract, and then enforce that they were not working for the competition, this would raise the barriers to entry for competitors. Likewise, there isn't much differentiation in the taxi market. It's nice if a driver comes with water and a nice-smelling car, but ultimately it's not a deal breaker.
The problem is the parts of their business that are unique have low barriers to entry, while the other parts are inherently inefficient (having each driver pay all the capital and running costs is more expensive than centralising). Sure the current taxi industry was ripe for innovation, but once that genie is out of the bottle there is nothing stopping someone else out ubering Uber. How does Uber stop this happening?
Assuming all this is correct (leaks sometimes are not) this does not solve the competition problem. The more money they make in a market the more attractive it comes for someone else to enter that market.
>You are right that there are low barriers to entry in this market - it's why most drivers do both Uber and Lyft. The underlying technology is the same, and the capital (drivers) is not proprietary and can be shared between different companies. However, if Uber were to stipulate that drivers sign an employment contract, and then enforce that they were not working for the competition, this would raise the barriers to entry for competitors. Likewise, there isn't much differentiation in the taxi market. It's nice if a driver comes with water and a nice-smelling car, but ultimately it's not a deal breaker.
The problem is the parts of their business that are unique have low barriers to entry, while the other parts are inherently inefficient (having each driver pay all the capital and running costs is more expensive than centralising). Sure the current taxi industry was ripe for innovation, but once that genie is out of the bottle there is nothing stopping someone else out ubering Uber. How does Uber stop this happening?